Das Munshi: Strategic move

New Delhi, June 5: The government today decided to bring casinos, credit card payment gateways run by MasterCard and Visa, money changers and transfer service providers, including Thomas Cook and Western Union, under the ambit of Indian law.

“The amendment bill will enable the government to meet certain domestic needs and international obligations,” information and broadcasting minister Priya Ranjan Das Munshi told reporters after the cabinet meeting.

The cabinet has decided to amend the Prevention of Money Laundering Act (PMLA), making it mandatory for these financial intermediaries to report all suspected transactions involving international transfers.

“In the present scheme of PML Act, full-fledged money changers, money transfer service providers and international payment gateways such as Visa and MasterCard are not within the ambit of a reporting regime. The proposed amendment will bring them under the reporting regime,” officials said.

Officials said money transfer service providers were not regulated at the moment and only their Indian agents were given special permission under the Foreign Exchange Management Act (Fema). Moreover, international payment gateways such as Visa and MasterCard are operating without any control.

The amendments have been proposed to deal with a new category of offences that have cross-border implications and to prevent fund transfers related to international crimes.

Officials said the amendment would stanch the flow of funds by persons linked to terrorist activities and put fetters on traders who were engaged in the business of under-invoicing export bills.

The amendments have been proposed following reports of fund transfers through credit cards by a number of persons with criminal backgrounds, they said.

At present, only banks and other financial institutions have to report suspicious transactions to the financial intelligence unit (FIU), set up under the finance ministry.

After scrutiny, these cases are forwarded by the FIU to enforcement agencies for action.

Money launderers transform monetary proceeds derived from criminal activity into funds through an apparently legit source.

They said the amendment in the act would also enable the government to contain the transfer of funds raised by smuggling antique items and wildlife resources out of the country.

Money that is laundered by criminals globally is estimated at 2 to 5 per cent of the world's gross domestic product. An estimated $100 billion is laundered yearly in the US alone, officials added.

EIL venture

Engineering and consultancy firm Engineers India Ltd (EIL) will enter into a joint venture with Italian firm Tecnimont and pick up a 30 per cent stake in the new company.

The cabinet today approved the formation of the joint venture and authorised EIL to pick up a 30 per cent stake in the proposed venture, Das Munshi said.

Set up in 1965, EIL provides engineering and technical services to petroleum and other industries.

For the quarter ended March 2008, EIL had posted a net profit of Rs 56.68 crore compared with Rs 42.52 crore during the same quarter in 2007.

Total income for the quarter increased to Rs 287.77 crore from Rs 209.26 crore in the year-ago period.

For the year ended March 31, 2008, the company had posted a net profit of Rs 194.60 crore against Rs 142.99 crore a year ago.

Tecnimont is an international EPC contractor with a strong presence in oil and gas, petrochemical and chemicals.